Wallet provider Abra launches crypto index-tracking token
The Bit10 token tracks the professionally-managed Bitwise 10 Large Cap Crypto Index and anyone around the world can invest in the token through Abra’s new app.
Abra’s Bitwise index tracks the composite price of the 10 largest cryptocurrencies by market capitalisation that also meet certain liquidity and security requirements.
Each month the set of 10 digital assets in the index are rebalanced to adjust to the constantly-changing market. Here’s how the index make up currently stands:
Since its launch a year ago, the index’s fund has performed better than investing in bitcoin alone. While bitcoin is down more than 60% since hitting its peak in January, it remains 53% higher than its value a year ago.
The Bit10 token is wholly underpinned by bitcoin, and the amount of bitcoin the consumer holds in the Bit10 token’s wallet is automatically adjusted to reflect the dollar value of the Bitwise index.
Abra explains that it is the counterparty to the contract and hedges away counterparty risk on all of its contracts. “This is exactly how all of the other synthetic assets in Abra function,” the company says.
Bit10 allows anyone around the world to invest in the crypto index on the Abra app. It requires just a $5 minimum investment with no restrictions on entry or exit timing and no fees.
How Bit10 works
The price of each Bit10 token is based on a real-time price feed of the Bitwise index, and positions in the token are held in multi-signature smart contracts on the Bitcoin or Litecoin blockchain. Customers can invest in either fiat currency or cryptocurrency using the app.
Daniel McGlynn, author of the Abra blog, explains: “An investor holds a position in the index, which is represented by a token. If the value of the index goes up, so will the value of the token.
“An investor realises the difference between his or her initial investment and the movement up or down when he or she exchanges the token for another asset within the Abra wallet or withdraws via bank wire or transfer or through one of the natively supported cryptocurrencies.”